Where’s the Shift?

Maybe you’ve read this article from CNBC Magazine already. It’s a fairly general article, called “Power Shift”, giving an overview of political and economic movements over the past decade and, more specifically, over the past year in Azerbaijan. There aren’t a whole lot of new or surprising facets of the article, but there are some interesting notes, such as this one:

Last year, the UK invested almost £1bn in the country or 51.9% of total foreign investment in Azerbaijan; BP, the oil giant, accounted for the vast majority of this. The next biggest investor was the US (9%), with Turkey contributing 3.6%.

That’s an impressive drop-off. Obviously, investments from oil companies are going to be the lion’s share of investments in a petrostate, but I can imagine that as Azerbaijan’s oil and gas reserves rise in importance, countries like China and India will want to muscle their way into the discussion, using foreign investment to build the relationship. Over the past year, China has started a few initiatives in Azerbaijan, including a new Confucious Institute in Baku. For what it’s worth, a lovely pedestrian boulevard was made here in Lənkəran back about 2005 or 2006, though I hear that the Chinese who built it received quite a bit of racist grief while they were here. And I’ve said before (as well as Eli) that Mandarin Chinese might be a more advantageous language for Azerbaijani students to learn.

Another interesting set of tidbits was is this one:

A huge international sea port is also being built on the Caspian to facilitate oil shipments from Kazakhstan. An international airport at Gabala is planned, while a terminal is being added to Heydar Aliyev International Airport in Baku. Tourism is expanding, thanks to the construction of several new hotels and resorts in Baku and along the coast.

Seaport? Check. That makes sense to me. That might be very helpful in turning Azerbaijan’s geography into a more advantageous asset, as I expressed here. An international airport in Gabala (Qəbələ)? This is a little confusing. I don’t mean to say that international airports are a bad thing, but let’s recall Azerbaijan’s size and it’s needs. Baku’s international airport is already more than satisfying the country’s needs and is scheduled for an expansion. No one will be complaining about the crazy crowds at Heydar Aliyev Airport except maybe during Eurovision. And there are already a bunch of airports all over Azerbaijan, including Zaqatala, Gəncə, and our very own in Lənkəran. I think there are more, too. Adding another sounds a little silly, unless there is something I’m missing here.

Also, that Azerbaijani tourism thing is creeping in again, with the fuzzy numbers to back it up. The article goes on to list the hotel projects in Baku that are aimed at tourism, supposedly. From my vantage point, this is definitely a situation where hoteliers are banking on supply-side forces to keep them afloat. I would be surprised if demand is even a blip on the screen. Further in the article, references are made to a magical million-tourist number. There is no way there are a million tourists even coming to Azerbaijan. We’ve already looked at this. I’m not sure how 17,000 turns into 1,000,000. And let’s not discuss the visa issue, either. Our esteemed writer, Pamela Ann Smith, probably needs to do a little more fact-checking on that score.

One of the things I do like about the article, though, is this note on education:

Noting that many Azeri students are currently studying in the UK, Alp adds that British universities are now “looking to form joint venture partnerships” with Azeri institutions to provide “world-class engineers, scientists and linguists.”

If they are sincere about that, it would be a major boost to Azerbaijan. Any way to boost the educations system here would be fantastic. As it stands today, the leading organizations and companies know that Azerbaijanis are not trained well enough here in their own country to be able to compete on an international level. From Doctorate education on down, no education level is even satisfactory for Azerbaijanis. If, however, partnerships like this mentioned above can flower, Azerbaijan could actually have the human capital to provide for itself. Instead, the major construction projects all go to foreign firms with foreign workers and top management in many companies has to be foreign to be run effectively. This goes for nearly every sector, from banking to tourism to agriculture to manufacturing and construction.

The article does highlight some possible future bright spots, which is encouraging as agriculture and other non-oil sectors grow. Being able to strengthen sectors outside of oil and gas is going to be key to actually developing a more equitable and democratic Azerbaijan. Until then, however, we’ll have to watch as the monopolies and the wealthy “super-elite” have their way with Azerbaijan’s resource wealth.

2 Responses

Although it is over long and over ranging, I thought it was a well written piece. Pamela Ann Smith picks up on a number of important issues and made me start thinking; “well, where are the Chinese?” They are certainly everywhere else. It does explain one other thing as well; why the British are so conciliatory to everyone in Azerbaijan.

I was at the British Business Group last week when Charles Hendry, the British Minister for Energy and Climate Change (his full title) spoke about the continuing warm relations between HM British Government and their counterparts here. I knew the Brits were big business partners, but quite how big! In economic times like these Azerbaijan represents not only a major source of energy for Europe but a continuing (and important) market for British goods and services.

Yep–much bigger partners than I thought, too. With all of the projects a lot of US organizations have here, I had figured they would be bigger than just 9%, a trifle compared with that 51% number from the Brits.

And the Chinese? I wonder if we’ll see more of them around here in the next few years. That would certainly add some flavor to the concept of diversity here.

About Aaron

I Speak for Myself

Here's the scoop: This blog is mine, and it only reflects what I'm thinking and doing, not what anyone else is thinking and doing. It certainly doesn't reflect anything from the US or Azerbaijan Government, nor Peace Corps.